- Cryptocurrencies are gaining popularity in America.
- That popularity has provided an opportunity for fraudsters to prey on unwitting Americans.
- Romance crypto scams, one of the popular ways that the scammers adopt, resulted in the loss of over $180M between January 2021 and March 2022
46,000 Americans have reported losing over $1B in crypto to scams since early 2021. That's according to a recent Federal Trade Commission (FTC) report. The report shows that the growing popularity of cryptocurrency has made it easier to lose money to scammers. Additionally, the fraudsters are using several means to rob their victims, with romance scams featuring prominently.
According to a BanklessTimes analysis, Romance scams are the second most common type of crypto scams. These accounted for losses amounting to $185M between 2021 and March 2022. Here scammers target individuals by pretending to be interested in a romantic relationship. As a result, they build up trust and confidence with their victims before swindling them.
BanklessTimes' CEO Jonathan Merry has been analyzing the data. Here’s him sharing his thoughts:
Victims of romance scams learn that the heart is not so smart the hard way. Their search for love makes them easy pickings for conniving individuals that dupe them out of their money. They put on an elaborate con that has their victims swooning over them, and by the time the victim catches on, they'll be several thousand dollars poor.Jonathan Merry
Which Other Crypto Fraud Schemes Did Americans Fall For?
Merry concludes that, on average, victims of romance crypto scams lose about $10,000. Again what makes pulling off such scams easy is that they have an investment twist to them. After hooking the victim, the fraudsters will “offer advice” on how to invest in crypto. By now, the victims are so trusting that they're willing to follow their “advice” to their detriment.
But romance scams aren't the only ones that Americans fall for. There are others, and the FTC reported that the most common type of crypto fraud was investment scams. Since 2021, the commission has received complaints of losses totaling $575M due to this kind of con. And the narratives follow the same script: the promise of making quick money coupled with the victim’s poor grasp and experience of cryptos.
Investment scammers paint investors a picture of huge returns quickly, only for them to divert the fund to their wallets. Others set up fake sites and apps that supposedly enable investors to track their crypto portfolios. They even enable “test withdrawals” to persuade them that their products are legit and their investments are safe. But should they fall for that ploy, they find it difficult to withdraw their cash.
Business and government impersonation scams are the other forms. These accounted for losses of $133M. These involve the fraudster impersonating someone in authority and then gaining the victim's credentials.
Younger Persons Are at More Risk
Younger people are more susceptible to crypto scams. Statistics show that most likely victims are in the 20 to 40 age bracket. The worst hit are people in their thirties, who suffer 35% of the losses. That said, older Americans tend to incur greater losses. For example, people in their seventies lose nearly $12,000 in these scams.
Crypto enthusiasts can take several measures to protect their funds online. Firstly, they should know that crypto investments are volatile and therefore don't guarantee profits. Secondly, anyone selling the idea that one can make big money quickly is always selling a lie. Finally, they shouldn't mix matters with financial investments besides protecting their online credentials.
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